Russia looks to introduce mobile contactless in two to three years

The head of Russia’s largest bank briefed the country’s President Dmitry Medvedev on the concept of mobile contactless payments last week — and explained that he is looking to launch a non-contact mobile payments system by 2011/12.

MEETING: Russia's President Medvedev is briefed on the concept of mobile contactless payments by Andrei Kostin, head of the country's largest bank

At a meeting on October 8 between Russian President Dmitry Medvedev and Andrei Kostin, head of VTB, Russia’s largest and mostly state owned bank, Kostin briefed the president on the health of VTB following the financial crisis — and on plans to introduce a “non-contact payments” system, although he was not specific about whether this would be based on near field communication or an NFC alternative.

“In my view the most important thing now, which is quite clear for the banking community, is not only the growth in the banking sector, which we enjoyed this year, but a qualitative improvement based on innovative technologies,” Kostin told the president.

“I can give you an example: One of the areas for introducing new technologies is retail banking,” he added. “We have seen a sharp increase in the number of users of up-to-date banking methods, in particular, via the internet or via a cellphone with access to the internet. The number of such users is growing: It doubled in the past year and we are predicting that it will double again.”

“What sort of transactions are involved here?,” asked the president. “Every sort of transaction,” replied Kostin. “Today the internet is not just a source of information but enables people to make payments, access their account and transfer money. Within two or three years we hope to create a system which will make non-contact payments possible. People will be able to use their cellphones to access a special reading device, for example in a shop, and the purchase price will be deducted from their account.”

“So now the bank’s customers have become more active in employing internet and their cellphone’s capabilities to manage their accounts, make transactions, transfer money, check their account balance — this is what you’re pointing out, isn’t it?,” asked the president.

“Yes. About 10% of our customers use internet banking. And if we’re talking about most active clients, we can even say 20%, so this proportion will grow,” explained Kostin. “We believe that the proportion of users of these types of services over the next three years will be as high as 40%, perhaps even a little higher.”

“But this is very convenient because they don’t need to get up from their kitchen table, so to speak, or they can look at everything from their office?,” asked the president.

“It is convenient and advantageous because it reduces the transaction cost for both the user and the bank, and it obviates the need for building expensive offices or hiring a large staff,” Kostin replied.